A recent international study showed that less than 4% of builders and contractors make it past the 10 year mark in business. If you’re reading this, congratulations you’re probably in that 4%. The hands down number 1 reason for failure is no surprise, poor cash-flow! When the money stops, the business ends.

Lets look at the six main reasons builders and contractors suffer from poor cash flow;
1. not charging enough for their work
2. failure to use or incorrect use of variations
3. failure to use or incorrect use of legal contracts
4. too many employees for the volume of work being produced
5. Too few payment schedules on their contracts
6. lack of profitable jobs

Now I could go on for days talking about the importance of having adequate financial controls, knowing your Breakeven Point, having the correct pricing strategy, eliminating inefficiencies etc. The reality is I’d be wasting my time if I didn’t first make sure you had the “Leadership Mindset” to make it happen. If you’ve found yourself going around in circles for years, perhaps its more about what’s going on in your head than anything else.

Most of the builders and contractors I’ve worked with have strong egos, are independent, and want to be self-directed in their business. I might even accuse some of being stubborn, myself included! This is neither good nor bad, it’s just the way we are. It gives us the go power that we need to make things happen. However, it can also work against us.
I had a builder come to me recently asking for help with his business, work was drying up and he wanted me to help him with his marketing and advertising. Before we got started I wanted to check in with him and see if he had the right mindset and an open perspective. If you’re not open to new information, you learn nothing!

The first sign that something was wrong was when he started debating everything I said. Now I’m not a genius by any means but having studied Marketing on three continents and worked with hundreds of builders and contractors 1 on 1 qualifies me to have an opinion on the subject.
For the duration of our conversation he sat there with arms folded resisting any new idea I put forward. Not surprisingly when I followed up two weeks later to see how he was progressing with the Marketing projects we’d discussed, he hadn’t done a thing. And of course when I asked him why, of course it was my fault!

Although Profit and Cash Flow are our highest priority with all our clients, without the right mindset or attitude its impossible to achieve a result with any business.

From a leadership perspective, you need to take ownership of your business and your business education. If you don’t who will?

This includes becoming more self aware and making the necessary changes to a become a better leader and businessman. Ultimately this is about thinking differently and developing new “habits”. The specific changes you need to make will differ depending on what habits you already have. When breaking bad habits or developing new positive ones you need to follow the 30 day challenge i.e. 30 days to break a habit and 30 days to form a new one.

Time management and financial management are two critical “behavior change” areas which we always looked at first. Everyone can improve their time management; the majority of builders and contractors in this industry need to dramatically improve how they manage their financials. If you and I were going to invest in a business together, here are the business basics that I would expect you to have:

1. An open mind and unyielding commitment to your own leadership growth and personal development
2. an understanding of “Sales process”
3. a commitment to education
4. an understanding of mark-up, gross margins and breakeven points
5. a readiness and willingness to do whatever it takes to get the job done

Make sure you’re not like the pigheaded bloke I met a few weeks ago and and stay “open” enough to enjoy the business success and lifestyle you deserve.

Do you have clients tell you “your price is too high”? I have a lot of builders tell me they are getting this feedback even though they know they have cut the quote to the bone.

Do your clients really know one way or the other if your price is too high? “Your price is too high” is a tired old line that your customers have been trained to use to get you, the builder, to pull back on your margins. They have been told by the media, their neighbours, someone at work, their family, whoever, that if they tell you “your price is too high”, you will, in all likelihood, change the quote to some lower number.

I have a friend who does this regularly and says he’s surprised how often people do it, even the major chain stores. I decided to try it recently at a rebel sport store at our local Westfield and they asked me if a $30 discount would be ok? So I know it works and I’d recommend it IF you are the customer.

Lowering the price to win the job is exactly what most “order takers” will do. An educated builder knows better and does not lower their price, unless the client changes the job.

Now you might be saying to yourself, ‘but I know my price was too high because the client told me I came in above the other two quotes!’
“Your price is too high” (and that statement can come in a number of different forms) simply means that you have not done your job as a ‘salesperson’. Plain and simple, you have been lazy and have missed some very important steps in the ‘sales process’.

The number one rule for sales is to ‘qualify’ your prospect. You need to pin down the budget to the point that you know exactly what they want and are willing to spend.

Here are the four essential questions that need to be answered;

1. What do you want to do?
2. When do you want to do it?
3. Who will make the buying decision?
4. What does that person(s) want to spend?

If you get the answer to (at least) those four questions, you will get to a “yes” much quicker. Sticking to and getting the answers to those four questions will help you qualify your prospect and save you a world of pain in wasted time and energy down the track.

Over the years I’ve compiled a list of the most affective qualifying questions a builder can ask. Click here to download them now. Knowing the answer to these questions will take your sales conversion rate from 1 in 6 to 1 in 3 very quickly, without lowering your margins. Learn the technique, ask the questions, get the answers and watch not only your sales increase, but your profits increase as well.

To your ongoing success.

Kurt

MASTER BUSINESS COACH
E: kurt@builderscoach.com
www.builderscoach.com